Archive for the ‘Wall Street’ tag
Bankrate.com Mortgage Trend Index (August 14, 2008)
I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week’s survey is now available.
As a reminder:
- The survey is for conforming loans only.
- I welcome emails from readers about purchase or refinance plans.
- I twitter market updates a few times daily. Follow me.
Anyway, on to the group’s predictions for the next 30 days:
- 38% of participants predict rates will increase
- 31% of participants predict rates will decrease
- 31% of participants predict rates will remain unchanged
I am predicting that rates will increase over the next 30 days, but that doesn’t mean you should necessarily follow my advice when choosing whether to lock a rate, or float it. My advice may not be appropriate for your individual situation.
From the Bankrate.com survey:
"New loan fees from Fannie and Freddie wipe out market gains. The ‘middleman’ fee takes its toll."
Remember: Fannie Mae and Freddie Mac stand between conforming borrowers and Wall Street so if the two firms want to generate some extra income, all they have to do is implement loan-based fees.
There have been four separate increases since December 2007. We should expect more later this year.
Translating The Federal Reserve’s Announcement Into English (August 5, 2008)
For the second consecutive meeting, the Federal Open Market Committee left the Fed Funds Rate unchanged at 2.000 percent.
The key comment — which also appeared in its June statement — is below:
Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.
Translated, it reads:
Rate and policy changes we made until this point have yet to work their way through the economy, but when they do, we expect them to right the economic ship.
In other words, the Fed will likely stay on pause through its September 16 meeting unless something freaky happens. The Fool in the Shower, by the way, is one such freak.
Source
Parsing the Fed Statement
The Wall Street Journal Online
August 5, 2008
http://online.wsj.com/internal/mdc/info-fedparse0808.html
Use A Boy Scout’s Approach When Shopping For Mortgage Rates
If the changing mortgage guidelines don’t bedevil you, changing mortgage rates will.
It’s getting even tougher to shop for low mortgages rate because rates refuse to stay in any one place for very long. The pie chart above puts it in perspective.
The data is astounding — especially against the rate-change numbers from earlier this year. It appears that mortgage rates are getting more volatile as the year goes on.
- For the 2 months ending May 19, 2008, rates changed on 68 percent of the days
- For the 2 months ending June 20, 2008, rates changed on 73 percent of the days
Today, rates change mid-day 82 percent of the time.
When you’re shopping for a home loan, remember that Wall Street often sets the rates — not the loan officer. Your best protection from mortgage rate volatility, therefore, is to saddle up with a pro that understands how Wall Street works, and then be prepared to lock your mortgage rate as soon as possible.
This last step is critical.
As an example, think back 6 months. On January 23, 2008, 30-year fixed mortgage rates dipped to 5.125% and stayed there for fewer than 3 hours. The 30 days that followed was a complete unravel job.
Shoppers that were prepared when rates dipped in January now have very mortgage rates. Those unprepared, however, missed the boat.
Volatility comes from economic uncertainty and that should continue at least through the rest of the year and probably deep into 2009. The best protection from it is simple — make like a boy scout.